5 Business Models for Codecademy

I first met the founders of Codecademy through the Columbia Venture Community. Zach introduced himself during a CVC event at General Assembly, where we exchanged thoughts on startups internships and he told me about his experience at GroupMe. Ryan had been popping up on my radar throughout college, since we shared mutual friends and he was the online lead engineer for the Columbia Daily Spectator. I have much respect for both of them, and this personal connection only made me more excited to hear about their new startup and all the press it has received.

Recently, however, I have become more wary of startups that do show high levels of user engagement without a clear path to monetization. I’ve discussed this topic with a co-worker and here are my thoughts on how Codecademy would be able to monetize their product.

Freemium: For many other Saas companies, such as DropBox and LinkedIn, the freemium model has proven to work remarkably. With Codecademy’s consumer focus, this model is probably the easiest to implement. Basic Java lessons can remain free with Codecademy charging a small fee for more advanced programming topics. Premium version of Codecademy may also include features such as live chat TA sessions or coding battles between students.

Licensing: If Codecademy is able to build an engaging learning platform for programming, it has infinite potential to license this software to schools and corporations. At my firm, my co-workers and I are obliged to complete quarterly training exercises for regulatory reasons. I can imagine Codecademy serving refresher coding exercises to technology companies to help keep their workforce up-to-date.

Crowdsourcing: While a lot of startups are addressing the pain points of recruiting and hiring developers, Codecademy can’t really address this market because I think they are more about educating than finding talent. However, if there is a way to add a hiring component to the existing educational platform, I see the potential for Codecademy to become the Mechanical Turk of small programming jobs.

Branded events: There are already official Meetup groups in over 170 regional areas worldwide; people are clearly already excited about the company. I can see Codecademy hosting large-scale events similar to TechCrunch Disrupt that are in-line with its mission of teaching people to program.

Advertising: While advertising has always been the business model of choice for most web companies, I think Codecademy can get creative with it. For example, instead of just displaying ads across the top, side, or bottom of the site, Codecademy can work with partner brands to offer sponsored lessons. Furthermore, it would be interesting to see how well advertisement would work inside the the lessons themselves, similar to how video games now feature branded billboards/items within the gaming environment.